Autumn Tracker | Tracker Back Issues

 The Practice of Healthcare Sales

Karen Stowe



Key Findings

1. Participants were asked to identify what sales issues/challenges they will face over the next one to three years. The top three challenges identified were:

  • Measuring staff results
  • Sales planning
  • Developing or refocusing the sales effort

Outside of the healthcare industry, challenges documented in a recent American Productivity and Quality Center study found these top three responses:

  • Increasing sales force productivity
  • Improving customer satisfaction
  • Expanding into new market segments

2. Over 90% of participants are unable to track revenue by customer group making it nearly impossible to relate sales to revenue in order to document a return on investment. Without this proof, healthcare sales efforts tend to be undervalued and underappreciated by senior management.

3. Less than 36% of participants have provided their sales staff with any healthcare-specific sales training. A recent study by Dartnell conducted within industries other than healthcare found that an average of 97 hours of training is provided for new sales staff each year at a cost of $5,225 per salesperson. The Dartnell study also found that an average of 32.5 hours of ongoing sales training is provided for experienced sales staff each year.

4. Within healthcare, over 64% of participants assign duties other than sales to their sales staff. As a result, the sales staff spends only an average of 46% of their time selling and servicing their target audience. Findings outside of healthcare show that salespeople spend their time doing the following activities:

  • 30.4% selling face-to-face
  • 20.8% selling over the telephone
  • 19.4% customer service
  • 15.8% administrative work
  • 13.7% travel

5. 69% of survey participants compensate the sales staff on a straight-salary basis. Outside of healthcare, a 1999 Dartnell study indicates that less than 20% of companies compensate their sales staff on a straight-salary basis. Instead, over 52% of salespeople are paid a combination of salary plus incentive.

  

In the last few years, healthcare has evidenced a heightened awareness toward sales. The commitment of resources to sales has increased significantly as more organizations dedicate identified staff to the representation and selling of healthcare products and services. More time and effort have gone into the planning and deployment of sales strategies and tactics to improve the financial positions and customer relationships of healthcare organizations.

With this focus of committed resources comes an increase in the uncertainty about the results those resources have achieved. Senior leaders of healthcare organizations have questioned the effectiveness of their investment in resources dedicated to the sales function. Other industries have extensive records of accomplishment and agreed-upon performance metrics from which to determine organizational sales effectiveness, but within healthcare, no such history or metric exists. Further, no industry-wide measures of sales performance exist to provide a context within which any single organization can assess its own performance.

There appears to be an increasing need for a strategic shift from cost management to growth management. As healthcare organizations continue to address the limitations on current revenue streams, they are seeking strategies for growth. A key factor in growth of revenue and/or volumes is optimizing direct sales, service opportunities, and relationships with key customer groups (employers, physicians, payers and consumers).

Corporate Health Group (CHG), Systems Management Associates, Inc. and The Alliance For Healthcare Strategy And Marketing launched an inaugural effort to gather data about the healthcare sales function with all target audiences. A healthcare sales survey tool was mailed to several hundred hospitals nationally at the end of 1998. The data were compiled and analyzed in early 1999.

As you can see from the Key Findings (sidebar), there is a significant discrepancy in the findings between healthcare and other industries. Many companies such as Xerox, IBM and Sprint have spent years developing methods to maximize efficiency and effectiveness of their sales efforts. Healthcare organizations can benefit from their hard work and use their methods to accelerate change. After all, the findings are tested and proven and may help you convince skeptics within your organization that change is needed.

The next step in the ongoing healthcare sales evaluation will be a detailed analysis of sales to employers (i.e. occupational health, employee assistance programs, rehabilitation, and wellness). The distribution of an employer sales survey to hospitals nationwide will begin September 15, 1999 with a final report of findings available in early 2000.